case 19-4022, document 82-1, 02/22/2021, 3040567, page1 ......case 19-4022, document 82-2,...

19-4022 Seneca Nation of Indians v. State of New York

UNITED STATES COURT OF APPEALS 1

FOR THE SECOND CIRCUIT 2

____________________ 3

4

August Term, 2020 5

6

(Argued: October 2, 2020 Decided: February 22, 2021) 7

8

Docket No. 19-4022 9

10

____________________ 11

12

SENECA NATION OF INDIANS, 13

14

Plaintiff-Appellant, 15

16

v. 19-4022-cv 17

18

STATE OF NEW YORK, 19

20

Defendant-Appellee. 21 22

____________________ 23

24

Before: POOLER, LOHIER, and NARDINI, Circuit Judges. 25

26

Appeal from the judgment of the United States District Court for the 27

Western District of New York (Skretny, J.) confirming an arbitration award in 28

favor of the defendant State of New York. The Seneca Nation of Indians (the 29

“Nation”) argues that the arbitration panel majority manifestly disregarded the 30

Case 19-4022, Document 82-1, 02/22/2021, 3040567, Page1 of 28

2

Indian Gaming Regulatory Act and the district court erred in confirming the 1

award. Alternatively, the Nation argues that the district court erred in declining 2

to refer the issues raised to the Department of the Interior pursuant to the 3

primary jurisdiction doctrine. We agree with the district court that the dispute 4

was a question of contractual interpretation reserved to the arbitral panel and 5

referral was not necessary. Therefore, we AFFIRM the judgment of the district 6

court. 7

____________________ 8

RIYAZ A. KANJI, Kanji & Katzen PLLC, Ann Arbor, 9

MI, for Plaintiff-Appellant Seneca Nation of Indians. 10

11

Carol E. Heckman, Carson R. Cooper, Lippes Mathias 12

Wexler Friedman LLP (on the brief), Buffalo, NY, for 13

Plaintiff-Appellant Seneca Nation of Indians. 14

15

GREGORY M. STARNER, White & Case LLP (Matthew 16

L. Nicholson, Lauri Kai, on the brief), New York, NY, for 17

Defendant-Appellee State of New York. 18

19

20

POOLER, Circuit Judge: 21

Plaintiff-Appellant Seneca Nation of Indians (the “Nation”) appeals from a 22

judgment of the United States District Court for the Western District of New 23

York (William M. Skretny, J.), entered on November 12, 2019, confirming an 24


3

arbitral award for the State of New York. In the district court, the Nation argued 1

that the arbitration panel majority manifestly disregarded the Indian Gaming 2

Regulatory Act (“IGRA”), 25 U.S.C. §§ 2701–2721. The Nation argued that the 3

panel usurped the authority of the Secretary of the Interior (the “Secretary”) by 4

requiring the Nation to continue making payments to New York during the 5

renewal period of a gambling compact between the parties. Alternatively, the 6

Nation argued that the district court should refer the issues raised to the 7

Department of the Interior (“DOI”) pursuant to the primary jurisdiction doctrine 8

if it had any doubt as to whether the Secretary’s approval was required for those 9

continued payments. 10

The district court rejected these arguments, finding that the arbitral panel 11

did not manifestly disregard the law in deciding on a disputed contractual term 12

and imposing the payments. The district court also determined that referral to 13

the DOI would undermine the parties’ agreement to submit disputes under the 14

gambling compact to binding arbitration, and in any case was unnecessary to 15

assess the propriety of the arbitration panel’s resolution of a contract dispute. 16

Therefore, the district court confirmed the award. 17


4

For the purposes of this appeal, the Nation concedes that it cannot 1

relitigate the question, decided by the arbitral panel, of whether the contract 2

requires payments during the renewal period. While the Nation focuses our 3

attention on IGRA and the purposes underlying it, our review is narrower. We 4

are simply asked to determine whether the arbitral panel manifestly disregarded 5

IGRA in its decision. As such, we consider only (1) whether IGRA clearly 6

imposes a requirement that the contract interpretation be subjected to the 7

Secretary’s further approval, and (2) if so, whether the arbitration panel ignored 8

or defied that governing law. It did not. The arbitral panel performed its 9

assigned task of contract interpretation through standard methods. The district 10

court also was not required to refer this question to the Department of the 11

Interior, as contract interpretation is within the core competency of courts. 12

We express no view about whether the Secretary’s position when the 13

Compact was deemed approved was that it in fact required additional payments 14

during the renewal term. We also express no view on whether a district court 15

reviewing the Compact in the first instance could determine after reviewing 16

post-agreement extrinsic evidence that the renewal term required continued 17

payments, or whether IGRA would require secretarial approval of judicial 18


5

interpretations that rely on extrinsic evidence. We hold only that the arbitral 1

panel – which did in fact consider IGRA – reasonably concluded that its task here 2

was a straightforward matter of contract interpretation not subject to the 3

Secretary’s approval. Therefore, we AFFIRM the judgment of the district court 4

confirming the arbitral award. 5

BACKGROUND 6

On August 18, 2002, the Nation and New York entered into a compact 7

setting forth the terms and conditions under which the Nation could conduct 8

certain casino-style gaming (Class III gaming, as defined by 25 U.S.C. § 2701(d)) 9

in New York (the “Compact”). On November 12, 2002, the Secretary completed 10

review of the Compact and declined to approve or disapprove it. Pursuant to 25 11

U.S.C. § 2710(d)(8)(c), the Compact was “considered to have been approved, ‘but 12

only to the extent the compact is consistent with the provisions of [IGRA].’” 13

App’x 163–64. The Compact became effective December 9, 2002. See Dep’t of the 14

Interior, Indian Gaming, 67 Fed. Reg. 72968-01 (Dec. 9, 2002). 15

The Compact provided for an initial term of 14 years and stated that 16

absent objection by either party, “the term of this Compact shall be renewed 17

automatically for an additional period of seven (7) years.” App’x 115. The 18


6

essential bargain of the Compact was that the Nation received exclusive rights to 1

maintain certain gaming machines in a large portion of Western New York (the 2

“Exclusivity Zone”) in exchange for graduated revenue-sharing payments to 3

New York from those machines (the “State Contribution”). For years 1-4, the 4

State Contribution was 18 percent of the “net drop” of these machines (money 5

dropped into machines, after payout, but before expenses). For years 5-7, it was 6

22 percent. For years 8-14, it was 25 percent. The Compact does not expressly 7

address the terms of any State Contribution in the 7-year renewal period. New 8

York received no other consideration in the Compact. The Nation’s obligation to 9

pay the State Contribution began on December 31, 2002, when the Nation opened 10

its first facility. 11

During the initial 14-year period, the parties seemed largely satisfied with 12

the agreement. The Nation notes that New York initially promised exclusivity for 13

the Nation in both slot machines and video lottery gaming devices. However, 14

New York began authorizing video lottery gaming devices within the Exclusivity 15

Zone in 2004 and has, accordingly, collected payments only on the Nation’s slot 16

machine revenue. Still, the parties agree that each received numerous benefits 17

from the Compact. New York received more than $1.4 billion in payments 18


7

through 2016. The Nation’s overall gaming revenue has been in the range of $6.5 1

billion during the term of the Compact. At the end of the 14-year term, neither 2

party delivered written objections to renewal, resulting in automatic renewal of 3

the Compact for an additional seven years on December 9, 2016. Therefore, the 4

Compact remains in effect through December 9, 2023. 5

Shortly before the initial term ended, the Nation contacted DOI regarding 6

its understanding of the revenue-sharing provisions of the Compact during the 7

renewal period. DOI responded with a technical assistance letter. The letter 8

stated that DOI understood that the Compact contained 14 years of revenue 9

sharing in exchange for 21 years of exclusivity and suggested that New York 10

would need to make additional economic concessions benefiting the Nation to 11

justify extending the revenue sharing provision to cover the renewal period. 12

On March 31, 2017, Seneca Nation President Todd Gates notified New 13

York Governor Andrew Cuomo that the State Contribution for the last quarter of 14

2016 would be the final payment under the Compact. The Nation stated that the 15

Compact required only 14 years of the State Contribution. New York responded 16

that the payments should continue at the 25 percent rate for the seven-year 17

renewal period, and when the parties were unable to reach agreement, New 18


8

York issued a demand for arbitration on September 7, 2017, in accordance with 1

the Compact’s dispute resolution procedures. On December 15, 2017, DOI 2

withdrew the technical assistance letter as it “did not provide the certainty 3

available to the parties in arbitration proceedings.” App’x 212. 4

Section 14 of the Compact provides for binding arbitration to resolve 5

disputes. The Compact states that in the event of a dispute, the parties should 6

engage in good faith negotiations. If the negotiations fail, “either [p]arty may 7

submit the dispute, claim, question, or disagreement to binding arbitration” to be 8

conducted in accordance with the rules of the American Arbitration Association 9

(“AAA”). App’x 143–44. The parties then appoint an arbitral panel of three, with 10

each party selecting one arbitrator, and the two arbitrators picking the third. The 11

Compact specifies that the arbitral award would be “final, binding and non-12

appealable.” App’x 145. The Compact gave the United States District Court for 13

the Western District of New York exclusive jurisdiction to enforce the arbitral 14

award. 15

The parties submitted their dispute to a panel of three arbitrators. The 16

Nation selected Kevin Washburn, Dean of The University of Iowa College of Law 17

and former Assistant Secretary of Indian Affairs in DOI. New York selected 18


9

Henry Gutman, of Counsel at Simpson Thacher & Bartlett LLP. Those two 1

arbitrators jointly selected William G. Bassler, a retired United States District 2

Judge for the District of New Jersey, as the arbitral panel chair. 3

With the parties’ agreement, the panel bifurcated its consideration of 4

liability and remedy after conducting full arbitration hearings on December 12 5

and 13, 2018, resulting in a January 7, 2019 partial final award on liability with 6

dissent; and an April 12, 2019 final award addressing remedies. The panel heard 7

live testimony, including direct and cross examination, from Robert Williams, 8

Deputy Secretary in the Office of Governor Cuomo. The panel also received two 9

witness statements from Williams, a witness statement from Gates, and a 10

statement from David Sheridan, Chief Financial Officer of the Seneca Gaming 11

Corporation. It also received other documentary evidence. 12

The panel majority—comprised of Bassler and Gutman—found that the 13

renewal provision was ambiguous as to the Nation’s obligation to pay the State 14

Contribution during the renewal period. Accordingly, the majority examined 15

extrinsic evidence to resolve the ambiguity. The panel concluded that “read as a 16

whole and in light of the extrinsic evidence” indicating “silence in the [renewal 17

term’s] negotiating history” and the “central premise” of an exchange of 18


10

exclusivity for revenue sharing, the Compact should be read to require the 1

Nation to make revenue sharing payments in the renewal period. App’x 29, 59, 2

63, 67, 77. The panel examined the parties’ pre-execution negotiations, post-3

execution communications, submissions from both parties to DOI, and 4

determined “[t]he essential bargain of the Parties’ agreement is a commercial 5

agreement wherein exclusivity payments are made in consideration for 6

exclusivity.” App’x 67. The panel concluded that it would also be commercially 7

unreasonable and against common sense to find that the word “renew” would 8

extend the Nation’s exclusivity without obligating the Nation to provide any 9

continuing consideration to New York. 10

The Nation argued that the panel could not approve additional payments 11

because the Secretary did not approve revenue sharing upon renewal of the 12

Compact, as required by IGRA. 25 U.S.C. § 2710(d)(8). The panel majority 13

acknowledged that it had no “legal authority to usurp the Secretary’s” approval 14

authority, but found that it could determine whether the terms of the Compact 15

“already provide[d] for revenue-sharing payments upon renewal.” App’x 65. 16

The majority found that the Nation’s argument depended on finding that the 17

Secretary shared its interpretation, to wit, that the renewal term the Secretary 18


11

deemed approved did not include additional payments—but there was “no 1

evidence in the record” to support that contention. Id. 2

Furthermore, the majority found that if the Nation’s argument were 3

correct, DOI never approved the renewal term, and “that arguably would mean 4

that renewal of the Compact was not properly authorized and the Nation’s 5

gaming activities are unlawful.” Id. The majority was also unpersuaded that 6

adopting New York’s position would be “approving” an additional seven years 7

of payments; rather “it would simply be finding that the terms of renewal in the 8

Compact deemed approved by the Secretary included revenue sharing payment 9

obligations.” App’x 66. 10

Washburn dissented. He viewed the terms of the Compact as 11

unambiguously providing for only 14 years of State Contribution, with no State 12

Contribution due in the 7-year renewal period. Washburn found the extrinsic 13

evidence, the context of the negotiations, and the intent of the parties failed to 14

support New York’s position that the Compact provided for State Contribution 15

payments during the renewal period. 16

With regards to IGRA, Washburn found the majority’s holding 17

inconsistent with federal law and policy. First, he cited County of Oneida v. Oneida 18


12

Indian Nation of New York State, 470 U.S. 226, 247 (1985), for the principle that if 1

the Compact were indeed ambiguous, it should be interpreted liberally in the 2

Nation’s favor and to its benefit. Second, he viewed the majority’s construction of 3

the Compact as directly counter to the purpose of IGRA. Finally, Washburn 4

wrote that if the Compact were ambiguous, the Secretary “cannot be said to have 5

considered and reviewed or approved this key [renewal] provision,” and 6

enforcement of the majority opinion had “the effect of enforcing an agreement 7

that goes beyond what was approved by DOI, thus potentially undermining 8

DOI’s important regulatory role.” App’x 102. 9

The majority’s final award on remedy found that “the Nation is obliged 10

under ¶¶ 4(c)(1) and 12(b) of the Compact to continue to pay the State 11

Contribution during the Compact renewal period at a rate of 25% of Net Drop of 12

each category of Gaming Device for which exclusivity exists payable on a 13

quarterly basis.” App’x 22. Accordingly, the panel held “the Nation is to 14

specifically perform its obligation . . . by paying the State Contribution currently 15

owed to the State, including all past due payments, and by making all future 16

payments in accordance with the Compact.” Id. at 23. The panel accepted the 17

parties’ joint submission that the 25 percent net drop during the period January 18


13

1, 2017 to December 31, 2018 was $255,877,747.44, and held that the amount 1

attributable to the fourth quarter of 2018 was due and payable by March 31, 2019. 2

The majority held that each party would bear its own attorneys’ fees and costs, 3

and administrative fees and costs along with the arbitrators’ expenses and 4

compensation would be divided equally between the parties. 5

On April 16, 2019, the Nation submitted the final awards to DOI for the 6

Secretary’s review. The Nation’s letter stated that the review was sought under 7

the implementing regulations requiring the Secretary to review any substantive 8

or technical amendments and would “serve to confirm [the award’s] 9

effectiveness and allow the Nation to perform its obligations under it and avoid 10

any further legal controversy as to its obligations thereunder.” App’x 213. On 11

June 3, 2019, DOI returned the award as it lacked a “certification from the 12

Governor or other State representative that he or she is authorized under State 13

law to enter into the compact or amendment, as required by 25 C.F.R. § 293.8(c).” 14

App’x 291. In a footnote, DOI made clear that it took no position on the question 15

of whether the arbitration award amended the Compact. 16

On June 6, 2019, the Nation filed a petition to vacate the final award under 17

the Federal Arbitration Act (“FAA”), 9 U.S.C. § 10. The State cross-petitioned to 18


14

confirm the award under the FAA, 9 U.S.C. § 9, on July 12, 2019. The Nation 1

argued that the panel majority manifestly disregarded IGRA’s requirement that 2

the Secretary review and approve compact obligations or amendments—in this 3

case, any payments beyond the 14-year initial term. Alternatively, the Nation 4

argued that if the district court was uncertain as to whether the Secretary 5

reviewed and approved the payments during the renewal term, it should stay 6

the case and refer the question to DOI pursuant to the primary jurisdiction 7

doctrine. New York argued that there was no basis to vacate the award or refer 8

the question. 9

On November 8, 2019, the district court confirmed the award. Seneca 10

Nation of Indians v. New York, 420 F. Supp.3d 89 (W.D.N.Y. 2019). The district 11

court found that the Nation “made no showing that the IGRA Secretary-approval 12

requirement clearly governs or that the panel simply ignored it.” Id. at 103. The 13

district court held that “the Nation’s position [wa]s premised on a proposition 14

that it has provided no authority for—that the arbitration award is an 15

amendment to the Compact that requires the Secretary’s approval under the 16

IGRA.” Id. at 104. Instead of a new payment obligation, the district court found 17


15

that the Secretary approved the renewal provision, and the panel simply 1

interpreted that approved provision to require further payments. Id. 2

The district court held that the panel did not manifestly disregard a clearly 3

governing legal principle, because it considered and appropriately rejected the 4

argument that the Nation offered. Id. at 103-04. The Secretary approved the 5

contract and the dispute resolution mechanism. Id. The district court declined to 6

refer the issue to DOI. The court reasoned that the “arbitration question was not 7

whether the Secretary explicitly approved State-Contribution payments during 8

the renewal period, but rather, whether the terms of the Compact that the 9

Secretary did approve provide for payment of the State Contribution during that 10

term.” Id. at 105–06. The district court held that this question was a matter of 11

contract interpretation in which DOI had no special expertise, and therefore that 12

referral to the agency was unnecessary. Id. at 105–06. 13

The Nation timely filed its notice of appeal. 14

DISCUSSION 15

We review de novo the district court’s application of the manifest 16

disregard standard to an arbitration award. T.Co Metals, LLC v. Dempsey Pipe & 17

Supply, Inc., 592 F.3d 329, 339 (2d Cir. 2010). 18


16

The FAA provides a “streamlined” process for a party seeking a “judicial 1

decree confirming an award, an order vacating it, or an order modifying or 2

correcting it.” Hall St. Assocs., L.L.C. v. Mattel, Inc., 552 U.S. 576, 582 (2008). 3

“Normally, confirmation of an arbitration award is a summary proceeding that 4

merely makes what is already a final arbitration award a judgment of the court, 5

and the court must grant the award unless the award is vacated, modified, or 6

corrected.” D.H. Blair & Co. v. Gottdiener, 462 F.3d 95, 110 (2d Cir. 2006) (internal 7

quotation marks and citations omitted). 8

Section 10 of the FAA allows a court to vacate an arbitration award in four 9

circumstances, primarily involving fraud, corruption, partiality, misconduct, or 10

imperfect execution or exceeding of arbitral powers. See 9 U.S.C. § 10. We have 11

held that “as judicial gloss on the[] specific grounds for vacatur of arbitration 12

awards” in the FAA, an arbitrator’s “manifest disregard” of the law or of the 13

terms of the arbitration agreement “remains a valid ground for vacating 14

arbitration awards.” Schwartz v. Merrill Lynch & Co., 665 F.3d 444, 451–52 (2d Cir. 15

2011) (internal quotation marks omitted). However, “[a] litigant seeking to vacate 16

an arbitration award based on alleged manifest disregard of the law bears a 17

heavy burden, as awards are vacated on grounds of manifest disregard only in 18


17

those exceedingly rare instances where some egregious impropriety on the part 1

of the arbitrator is apparent.” T.Co Metals, 592 F.3d at 339 (internal quotation 2

marks, citations, and alterations omitted). This Court will uphold an arbitration 3

award under this standard so long as “the arbitrator has provided even a barely 4

colorable justification for his or her interpretation of the contract.” Schwartz, 665 5

F.3d at 452. “Vacatur is only warranted, by contrast, when an arbitrator strays 6

from interpretation and application of the agreement and effectively dispenses 7

his own brand of industrial justice.” Weiss v. Sallie Mae, Inc., 939 F.3d 105, 109 (2d 8

Cir. 2019) (internal quotation marks omitted). 9

To succeed in challenging an award under the manifest disregard 10

standard, a party must make “a showing that the arbitrators knew of the relevant 11

legal principle, appreciated that this principle controlled the outcome of the 12

disputed issue, and nonetheless willfully flouted the governing law by refusing 13

to apply it.” Schwartz, 665 F.3d at 452 (internal quotation marks, citation, and 14

alterations omitted). In addition to this “subjective component,” a finding of 15

manifest disregard requires an objective determination that the disregarded legal 16

principle was “well defined, explicit, and clearly applicable.” Westerbeke Corp. v. 17

Daihatsu Motor Co., 304 F.3d 200, 209 (2d Cir. 2002) (internal quotation marks 18


18

omitted). 1

The Nation argues that the panel manifestly disregarded IGRA’s 2

requirement of secretarial review. IGRA provides that the Secretary “is 3

authorized to approve any Tribal-State compact entered into between an Indian 4

tribe and a State governing gaming on Indian lands of such Indian tribe.” 25 5

U.S.C. § 2710(d)(8)(A). Furthermore, a Tribal-State compact “shall take effect only 6

when notice of approval by the Secretary of such compact has been published by 7

the Secretary in the Federal Register.” Id. § 2710(d)(3)(B). The Nation contends 8

that, while the panel’s contract interpretation is not subject to challenge, when 9

the panel concluded that the contract was ambiguous, it necessarily held the 10

Secretary did not approve payments for the renewal term. 11

A. The Panel Did Not Manifestly Disregard IGRA 12

The panel did not manifestly disregard governing law. Neither party 13

disputes that the panel was aware of the secretarial review requirement of IGRA. 14

Indeed, the panel explicitly addressed the requirement in its decision. “[I]t is 15

beyond dispute that the Panel has no legal authority to usurp the Secretary’s role 16

and enforce a Compact term that the Secretary did not approve.” App’x 65. 17

Second, it explained that its award did not require independent secretarial 18


19

approval because it was merely interpreting a term in a compact that had already 1

been deemed approved by the Secretary. In short, far from flouting or 2

disregarding IGRA’s established requirement that the Secretary approve 3

Compact terms, the arbitral panel openly discussed and applied it. 4

The Nation tries to sidestep this conclusion by positing a different and 5

novel legal proposition – that secretarial approval is required for an arbitrator’s 6

interpretation of a gaming compact’s terms which is based on extrinsic evidence 7

that was not before the Secretary at the time of the compact’s approval – and 8

arguing that the arbitral panel manifestly disregarded this distinct proposition. 9

But the proposition advanced by the Nation does not, in fact, reflect the law, and 10

an arbitrator cannot be faulted for “manifest disregard” unless it has “willfully 11

flouted the governing law,” Schwartz, 665 F.3d at 452 (internal quotation marks 12

omitted and emphasis added). 13

It is not a clear controlling legal principle that the Secretary is required to 14

approve an arbitrator’s enforcement of its interpretation of an ambiguous 15

contractual term. The Nation disavows the argument that it views the arbitration 16

award as an amendment to the Compact. Instead, it argues that the Secretary’s 17

approval is required because there is no evidence as to how the Secretary would 18


20

interpret the disputed renewal provisions, so the Secretary cannot be said to have 1

approved the payments. 2

This argument suffers from several infirmities. First, the text of the laws 3

and regulations cited by the Nation contain no such requirement. IGRA simply 4

requires secretarial approval for gaming compacts, and the regulations address 5

amendments, not interpretations of existing contractual terms. See 25 U.S.C. 6

§ 2710(d)(3)(B), d(8)(A) (requiring secretarial approval for “compact[s]”); 25 7

C.F.R. § 293.4(a)–(b) (“Compacts are subject to review and approval by the 8

Secretary. All amendments, regardless of whether they are substantive 9

amendments or technical amendments, are subject to review and approval by the 10

Secretary.”) The Nation counters that IGRA makes clear that all terms of a 11

Compact are subject to the Secretary’s approval, so a term not approved by the 12

Secretary has no legal force. However, since the Nation acknowledges that the 13

award is not an amendment and acknowledges that it is bound by the panel’s 14

holding that the renewal term itself required payments, the provision of the 15

Compact that it challenges can only be the renewal term and that term—for the 16

purposes of this appeal—has already been deemed approved by the Secretary. 17

Second, there is no clearly controlling legal reason why the arbitrators’ 18


21

reliance on extrinsic evidence must be viewed as transforming the panel’s 1

contract interpretation into a new term requiring separate IGRA approval. 2

Consideration of extrinsic evidence has long been regarded as a staple of contract 3

interpretation. See Chicago, R.I. & P. Ry. Co. v. Denver & R.G.R. Co., 143 U.S. 596, 4

609 (1892) (“There can be no doubt whatever of the general proposition that in 5

the interpretation of any particular clause of a contract, the court is not only at 6

liberty, but required, to examine the entire contract, and may also consider the 7

relations of the parties, their connection with the subject-matter of the contract, 8

and the circumstances under which it was signed.”). A panel’s resort to evidence 9

outside the four corners of a contract does not necessarily imply its creation of a 10

term outside the contract’s scope. 11

The Nation cites Missouri River Servs., Inc. v. Omaha Tribe of Nebraska, 267 12

F.3d 848, 855 (8th Cir. 2001), for the proposition that a reviewing court should 13

invalidate an arbitration decision that adds an additional term to a compact in 14

clear conflict with the contractual text. But as we have just explained, here the 15

arbitration agreement left the question of contract interpretation to the panel, and 16

the panel’s resolution of that question did not add a new term to the Compact. 17

There is no suggestion the arbitrator lacked the power to order payments; 18


22

indeed, this was the very question submitted to it. Upholding the decision here 1

does not undermine IGRA’s secretarial review requirement. Instead, it merely 2

reinforces the principle that where a party chooses to leave contract 3

interpretation to arbitrators, a party cannot invoke that requirement to evade the 4

consequences of its choice. 5

Third, neither IGRA nor our case law contains a clear rule requiring 6

secretarial approval of arbitral awards based on extrinsic evidence. Even were 7

we to determine that, as a matter of first impression, IGRA’s secretarial approval 8

requirement applied in this context, the panel could not have willfully flouted 9

that legal principle because it was not “well defined, explicit, and clearly 10

applicable.” Westerbeke Corp, 304 F.3d at 209 (internal quotation marks omitted). 11

As such, the Nation cannot succeed on its manifest disregard challenge. See, e.g. 12

T.Co Metals, 592 F.3d at 339 (“[T]he award should be enforced, despite a court’s 13

disagreement with it on the merits, if there is a barely colorable justification for the 14

outcome reached.” (internal quotation marks and citation omitted)); Merrill 15

Lynch, Pierce, Fenner & Smith, Inc. v. Bobker, 808 F.2d 930, 934 (2d Cir. 1986) (“We 16

are not at liberty to set aside an arbitration panel’s award because of an arguable 17

difference regarding the meaning or applicability of laws urged upon it.”). 18


23

The Nation argues that to allow the panel majority to enforce its 1

interpretation would open the door to widespread evasion of IGRA’s secretarial 2

review requirement. It suggests that affirming the decision would allow parties 3

to evade review through secret side agreements and incorporate illegal terms 4

such as certain types of taxes that are themselves unauthorized under IGRA, 25 5

U.S.C. § 2710(d)(4). Again, this argument rests on accepting the view that the 6

renewal term did not require the payments, which conflicts with the panel’s 7

holding. If this case involved the panel introducing additional terms or terms in 8

conflict with the contractual text, a court might have a stronger basis to 9

determine that this ruling manifestly disregarded IGRA. Similarly, a court could 10

certainly vacate an arbitration award that interpreted an agreement to require 11

something expressly prohibited by law or statute, insofar as that would show 12

that the arbitrators “willfully flouted the governing law by refusing to apply it.” 13

Schwartz, 665 F.3d at 452 (internal quotation marks omitted). But here, there is no 14

side agreement or separate term that the panel incorporated in this case; the 15

panel held that the existing term required the payments. 16

In attempting to find support for a principle forbidding consideration of 17

post-agreement extrinsic evidence, the Nation cites to In re Nortel Networks Inc., 18


24

737 F.3d 265, 272 (3d Cir. 2013), which briefly touched on the difficulties of 1

resorting to extrinsic evidence in interpreting court-approved agreements. Since 2

the court could not be said to have examined that evidence in granting approval 3

to the agreement, the Third Circuit questioned whether this was permissible in 4

interpreting court-approved agreements. Yet that discussion was dicta, because 5

the Third Circuit resolved the question before it on the basis of the agreement’s 6

text, without resorting to extrinsic evidence. Id. Moreover, the dicta concerned 7

the importance of clear affirmative language indicating the parties’ agreement to 8

arbitrate allocation disputes in bankruptcy proceedings. Id Furthermore, the 9

language of the Third Circuit strongly implied that far from a clear application of 10

existing law, the question of whether the use of extrinsic evidence was 11

inappropriate in such circumstances was difficult and required further review. 12

Id. (observing that “[t]hese difficult questions underscore the usefulness of 13

reducing agreements . . . to plain language that can be recognized and enforced 14

by courts examining only the text of the agreement”). Here, even if we were to 15

agree with the Nation that there would have been some value in the panel 16

seeking secretarial review after determining that the agreement was ambiguous, 17

the panel’s decision to continue its assessment and determine the proper 18


25

meaning of ambiguous text was not the panel dispensing its own brand of 1

industrial justice in manifest disregard of governing law. See Weiss, 939 F.3d at 2

109. 3

B. Referral to the DOI Was Not Warranted 4

As an alternative to vacatur of the arbitral decision, the Nation argues that, 5

if there was any question regarding the validity of its argument, the proper 6

course of action would have been for the district court itself to refer the question 7

to DOI under the doctrine of primary jurisdiction. The doctrine of primary 8

jurisdiction allows a court to stay litigation and refer issues to an administrative 9

agency when a case involves issues that fall within the special competence of that 10

agency. See United States v W. Pac. R.R. Co., 352 US 59, 62–65 (1956). The district 11

court declined to do so here. We review a district court’s decision not to apply 12

the doctrine of primary jurisdiction de novo. Ellis v. Tribune Television Co., 443 13

F.3d 71, 83 n.14 (2d Cir. 2006). 14

In this case, referral would have been inappropriate and would have 15

clashed with the goals of the FAA. The FAA explicitly states: 16

If the parties in their agreement have agreed that a judgment of the 17

court shall be entered upon the award made pursuant to the 18

arbitration, and shall specify the court, then at any time within one 19


26

year after the award is made any party to the arbitration may apply 1

to the court so specified for an order confirming the award, and 2

thereupon the court must grant such an order unless the award is 3

vacated, modified, or corrected. 4

5

9 U.S.C. § 9 (emphasis added). The parties here agreed to put the arbitration 6

award before a district court. Court review under the FAA is intended to be a 7

“streamlined” process for a party seeking a “judicial decree confirming an 8

award, an order vacating it, or an order modifying or correcting it.” Mattel, 552 9

U.S. at 582. “Normally, confirmation of an arbitration award is a summary 10

proceeding that merely makes what is already a final arbitration award a 11

judgment of the court, and the court must grant the award unless the award is 12

vacated, modified, or corrected.” D.H. Blair, 462 F.3d at 110 (internal quotation 13

marks and citation omitted). Invoking primary jurisdiction here would 14

unnecessarily prolong the case and undermine the goal of the FAA to promote 15

speedy and efficient resolution of disputes. 16

Additionally, the factors we have instructed courts to consider in assessing 17

primary jurisdiction do not favor referral here. We consider four factors when 18

determining whether to apply the doctrine: 19

(1) whether the question at issue is within the conventional 20

experience of judges or whether it involves technical or policy 21


27

considerations within the agency’s particular field of expertise; (2) 1

whether the question at issue is particularly within the agency’s 2

discretion; (3) whether there exists a substantial danger of 3

inconsistent rulings; and (4) whether a prior application to the 4

agency has been made. 5

6

Ellis, 443 F.3d at 82–83. Contract interpretation is a basic competency of courts, 7

and, as discussed above, the parties asked the arbitrators to decide if the renewal 8

provision of the Compact required additional payments. Moreover, while the 9

Nation stresses that it seeks a review of the question of approval of the payment 10

obligations under the renewal term, not an interpretation of the Compact, the 11

two issues cannot be separated in this manner. While in the first instance DOI 12

exercised broad discretion to approve or reject the Compact, IGRA does not 13

provide for subsequent agency review upon an arbitrator’s determination that a 14

party is required to make further payments under an existing compact. As for 15

the final two factors, the record reveals that DOI has already declined to 16

intercede in this case. DOI withdrew its technical assistance letter in favor of the 17

certainty of the arbitration proceedings. DOI again declined to become involved 18

upon the Nation’s request after the end of the arbitration hearings. Accordingly, 19

there is no indication that DOI could reach a contrary ruling. The district court 20

was correct in finding that agency referral was not warranted. 21


28

CONCLUSION 1

In this case, we are not asked to make pronouncements regarding the 2

wisdom of the panel decision or of the Secretary’s view of the disputed term. The 3

Nation attempts to draw the court into these disputes and the competing policy 4

interests of the Nation and the State. However, the parties agreed to leave these 5

difficult questions to the arbitrators. 6

We conclude that the arbitral panel did not manifestly disregard 7

governing law, and the district court properly confirmed the award. 8

Accordingly, the judgment of the district court is AFFIRMED. 9


United States Court of Appeals for the Second Circuit Thurgood Marshall U.S. Courthouse

40 Foley Square New York, NY 10007

DEBRA ANN LIVINGSTON CHIEF JUDGE

CATHERINE O'HAGAN WOLFE CLERK OF COURT

Date: February 22, 2021 Docket #: 19-4022cv Short Title: Seneca Nation of Indians v. State of New York

DC Docket #: 19-cv-735 DC Court: WDNY (BUFFALO) DC Judge: Skretny

BILL OF COSTS INSTRUCTIONS

The requirements for filing a bill of costs are set forth in FRAP 39. A form for filing a bill of costs is on the Court's website.

The bill of costs must: * be filed within 14 days after the entry of judgment; * be verified; * be served on all adversaries; * not include charges for postage, delivery, service, overtime and the filers edits; * identify the number of copies which comprise the printer's unit; * include the printer's bills, which must state the minimum charge per printer's unit for a page, a cover, foot lines by the line, and an index and table of cases by the page; * state only the number of necessary copies inserted in enclosed form; * state actual costs at rates not higher than those generally charged for printing services in New York, New York; excessive charges are subject to reduction; * be filed via CM/ECF or if counsel is exempted with the original and two copies.


United States Court of Appeals for the Second Circuit Thurgood Marshall U.S. Courthouse

40 Foley Square New York, NY 10007

DEBRA ANN LIVINGSTON CHIEF JUDGE

CATHERINE O'HAGAN WOLFE CLERK OF COURT

Date: February 22, 2021 Docket #: 19-4022cv Short Title: Seneca Nation of Indians v. State of New York

DC Docket #: 19-cv-735 DC Court: WDNY (BUFFALO) DC Judge: Skretny

VERIFIED ITEMIZED BILL OF COSTS

Counsel for _________________________________________________________________________

respectfully submits, pursuant to FRAP 39 (c) the within bill of costs and requests the Clerk to prepare an itemized statement of costs taxed against the ________________________________________________________________

and in favor of _________________________________________________________________________

for insertion in the mandate.

Docketing Fee _____________________

Costs of printing appendix (necessary copies ______________ ) _____________________

Costs of printing brief (necessary copies ______________ ____) _____________________

Costs of printing reply brief (necessary copies ______________ ) _____________________

(VERIFICATION HERE)

________________________ Signature


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